Monday, December 14, 2020

FDA Authorises First Covid-19 Vaccine in the US

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News shaping
the markets today

     

What’s happening: The US FDA (Food and Drug Administration) late Friday issued an EUA (emergency use authorisation) for BNT162b2, the covid-19 vaccine candidate developed by Pfizer and its German partner BioNTech.

What happened: With the latest move by the FDA, the US becomes the fifth country after the UK, Bahrain, Canada, and Saudi Arabia to authorise the emergency use of a coronavirus vaccine.

The vaccine was approved for individuals 16 years and above despite some apprehensions. The EUA lasts as long as the pandemic emergency continues, following which Pfizer will need to apply again for a full approval by submitting safety data from participants of its Phase III trials.

Why it matters: Pfizer’s vaccine candidate showed 95% efficacy in preventing covid-19 during the late-stage trial. Healthcare workers and older people are likely to be the first to receive vaccine shots in the first round of 2.9 million doses during December.

The US health authorities and various shipping services have been readying an inoculation campaign to deliver the vaccine doses. Pfizer is expected to roll out the first doses of the vaccine immediately, reaching 50 million doses by yearend. The US had earlier signed a deal with the pharmaceutical giant to provide 100 million doses for $1.95 billion, which is enough for 50 million people. The deal also provides the US government the option to purchase another 500 million doses thereafter.

Pfizer and BioNTech plan to supply around 1.3 billion doses worldwide by 2021.

Despite this positive news, investor sentiment is likely to remain muted, with reports of severe allergic reactions to the vaccine coming in from the UK, the first country to approve Pfizer’s covid-19 vaccine on December 2. The US FDA has also warned people with a history of “significant” allergic reactions to avoid taking the vaccine developed by Pfizer.

What to watch: Pfizer and BioNTech are collecting additional data for their vaccine candidate to file a BLA (biologics license application) for gaining full approval in 2021.

The companies expect to obtain EUAs for the vaccine in other regions, including Europe, where the European Medicines Agency's scientific committee for human medicines is expected to announce its decision after a special meeting on December 29.

Markets will also keep an eye on news around Moderna's covid-19 vaccine, which is currently being reviewed by the FDA. The US government has the option to purchase 100 million doses this vaccine after the FDA grants an EUA

The Markets Today

     

The British pound will be in focus today following the extension of Brexit trade talks beyond Sunday’s deadline.

Context: The British pound gained versus the US dollar and the euro this morning on hopes of the UK and EU reaching a trade deal after both parties agreed to extend talks beyond the earlier deadline of Sunday.

Details: The UK and the EU have not been able to sort out their differences on key issues including fisheries and fair competition. Both sides have, however, agreed to extend their talks to secure a deal despite missing their recent deadline.

The UK formally announced its exit from the EU in January and has been in a transition period since then. If the parties are unable to reach any agreement by December 31, there will be a significant impact on businesses in both regions.

The US dollar recently has been under selling pressure amid ongoing stimulus talks, which were extended for another week. Traders were also selling the greenback on hopes of a strong global rebound, driven by encouraging covid-19 vaccine news.

The dollar index, which measures the greenback’s performance versus a basket of six major currencies, has been hovering close to a two-and-a-half year low.

The British pound gained 0.7% to $1.3319 this morning, notching its strongest single-day gain since December 1. The sterling also climbed around 0.5% to 91.10 pence against the euro, recording its biggest one-day gain since December 9.

What to watch: Markets will monitor the ongoing Brexit deal talks between the UK and the EU with hopes of then sorting out their differences as soon as possible. The GBP/USD forex pair is likely to receive an additional boost from pressure on the US dollar ahead of the Federal Reserve’s policy meeting this week.

Other Markets: US indices closed mostly mixed on Friday, with the S&P 500 and Nasdaq 100 declining by 0.13% and 0.23%, respectively, while the Dow Jones index gained 0.16%.

Support & Resistances
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Futures at 0400 (GMT)

What else to watch today

     

Germany’s wholesale prices, Turkey's retail trade, Eurozone’s industrial production, Brazil’s IBC-Br index of economic activity and consumer confidence, China’s foreign direct investment as well as the US inflation expectations.